BUSI 721
Jones Graduate School of Business
Rice University
Kerry Back
The CAPM formula is
\[\bar{r}_i - r_f = \beta_i(\bar{r}_m-r_f)\]
where \(r_m\) = market return and \(\beta_i\) is the slope of the regression line of \(r_i-r_f\) on \(r_m-r_f\).
\[r-r_{f}=\alpha + \beta(r_m-r_f)+e\]